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Your business has a credit score whether you’ve checked it or not. This score is available to anyone—potential lenders, investors, and partners included. Parties interested in your business look at your credit score to determine financial reliability. Your score is a crucial barometer for lenders in determining the terms and availability of financial products.
Sometimes called a “commercial credit score,” a business credit score is a number assigned to a business that serves as a measure of its creditworthiness. In the United States, 3 credit bureaus assign business credit scores. These bureaus determine your business’s score based on multiple factors, like the length of time you’ve been in business and your debt load.
Dun & Bradstreet’s (D&B) CreditSignal service alerts you when your scores or reports change but doesn’t give you access to your detailed credit report. According to their website, “CreditSignal only indicates that your D&B scores and ratings have changed and alerts you when your business credit file has been purchased.”
Credit monitoring services like Nav give you access to a summary of your Experian Intelliscore report and Dun & Bradstreet Paydex report when you sign up for a free account. Their free report “provides business credit grades for each score as well as summary reports, your personal credit score from Experian, and free tools to help you build strong business credit.”
There are 3 major business credit reporting agencies that offer detailed reports on your credit. You must purchase these reports, but they are the most informative—and the type of reports looked at by other companies.
D&B generates both a score and a report. To check your credit report, you’ll first need a DUNS number. D&B may have already generated this 9-digit identification number for your business. If they haven’t, you can get one for free using their website. To view your report, you’ll have to sign up for a CreditBuilder Plus account for $149 a month.
Equifax offers another report often used in financing decisions. For $99.99, you can pull one Equifax report and access your Equifax Business Credit Risk Score and Equifax Business Failure Score. Additionally, you can purchase a bundle of 5 reports for $399.95 if you plan to check your credit multiple times, which breaks down to $79.99 per report.
To view your full Experian report, you can either do a one-time pull or subscribe to a yearly membership. The one-time pull is $39.95, giving you access to your current score and credit report. For $179 per year, you can have ongoing access to your score and report throughout the year.
Beyond the fact that business credit scores are for companies and personal credit scores are for, well, people, these 2 scores are separate and measured on different scales. To make matters more confusing, the 3 major bureaus that assign business credit scores use slightly varying scales themselves.
A business credit score is based on your companies’ credit activities, not your personal debts. Furthermore, business credit scores are public information. If your company is less than a year old, you might not have a business credit score yet.
Most lenders will look at your personal credit score and your business credit score when making lending decisions.
Your business credit score is based on your company’s overall activity, like when you opened, paired with its credit activity, like how much debt you owe. Each credit bureau has its own method of calculating scores by weighting factors differently, but they generally follow similar protocols. Here are the factors that influence your business credit score the most:
Experian rates business credit scores from 0 to 100, while Dun & Bradstreet has a range of 1 to 100. Equifax calculates 3 different business credit scores in their reports. Of these 3, Equifax’s Payment Index score is the most important for many lenders, and this score has a range of 1 to 100.
The higher your business credit score is, the better. Generally, it will be hard to find funding if your score is under 75.
Personal credit scores, on the other hand, have a range of 300 to 850, with a score above 690 considered good.
Improving your business credit score is no simple, fast task. It is better to be proactive instead of reactive. One of the easiest ways to build your business credit is to keep up-to-date with your payments. Aim to have a small amount of outstanding debt compared to the total amount of credit available to you—this lowers your debt ratio and makes you more attractive to lenders. Like your personal credit score, responsible management of your business’s financial health is the best way to maintain high business credit scores.
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California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through Lendio Partners, LLC, a wholly-owned subsidiary of Lendio, Inc. and a licensed finance lender/broker, California Financing Law License No. 60DBO-44694.